Maryland Research and Development Tax Credit

Maryland Research and Development Tax Credit

Offers an annual Maryland tax credit for qualified research spending by businesses, with pool-based allocation and employee thresholds.

Eligibility · United States · US-MD

The Maryland Research and Development Tax Credit, administered by the Maryland Department of Commerce, provides a 10% income tax credit on eligible R&D expenses exceeding the Maryland Base Amount, using the same qualified research expense definitions as federal IRC §41(b). The total annual statutory pool is capped at $12 million, of which $3.5 million is set aside exclusively for small businesses — defined as for-profit entities with net book value of assets under $5 million at the beginning or end of the tax year. No individual applicant may receive more than $250,000 in credits per tax year; if total applications exceed the statutory caps, credits are prorated across all certified recipients.

Only for-profit businesses incurring qualified R&D expenses within Maryland are eligible. The program has a statutory sunset of June 30, 2027, subject to extension by the Maryland General Assembly; it is not available to nonprofits, universities, or research organisations. Applications follow a defined annual cycle tied to the tax year in which R&D expenses were incurred: for Tax Year 2025 expenses, the application window opens June 1, 2026 and closes November 15, 2026. Commerce issues certifications by February 15 of the following year. Certified businesses may claim the tax credit on their expense-year return or carry it forward to any of the following seven tax years.

Applications are filed through the dedicated portal at rdtaxcredit.commerce.maryland.gov. Businesses should confirm that Maryland R&D activity is documented using the federal IRC §41(b) methodology and that expenses are attributable specifically to Maryland operations. The contact for the programme is Amy Poad, Tax Specialist, Maryland Department of Commerce (410-767-0429), located at 401 E. Pratt Street, Baltimore, MD 21202.